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American chain to roll out donuts such as coconut rasgulla, gulab jamun & motichoor laddoo as part of its localisation drive

This festive season, Haldiram’s and Bikanervala have a completely unexpected competitor. Taking localisation of its menu to a new micro-level, American donuts and coffee chain Dunkin’ Donuts is in the process of rolling out variants of donuts like coconut rasgulla, gulab jamun and motichoor laddoo.

With its franchise owner Jubliant FoodWorks looking to drive volumes and replicate the performance of its other brand Domino’s Pizza in India, the localisation drive is a first for Dunkin’ Donuts in India.

For Dunkin’ Donuts, the world’s largest donut brand which forayed into the country early last year, the move is ambitious to say the least. Dunkin’ Donuts India president and COO Dev Amritesh says the product’s ‘flexibility’ lends itself to a high degree of customisation. “There’s a significant opportunity to customise donuts for consumers — both for those who are used to the product and those who aren’t yet familiar with donuts.” There have been examples of countries customising donut toppings in other markets from time-to-time, but Amritesh says the extent of localisation is probably the highest in India. The donuts are being rolled out in time for the Diwali season, but the fastest-moving ones will become a permanent feature on the Dunkin’ menu.

The idea may also be exported to other markets if they find acceptance, says Amritesh. Abneesh Roy from securities firm Edelweiss Securities wrote in a report last month: “We expect Jubilant FoodWorks’ valuations to remain expensive given efficient execution, sharp expansion and innovation.”

Early last year, Jubilant had inked a master franchisee alliance with Dunkin’ Donuts, an alliance that diversified its portfolio and reduced its dependence on a single brand – Domino’s. Dunkin’ Brands is the world’s fastest largest coffee and baked goods chain with a global sales of $6 billion.

Localisation is critical to MNCs operating in India especially in foods and is a rule rather than an exception. And, everyone from burger and fries chain McDonald’s to cereal maker Kellogg’s to chips firm PepsiCo Foods has been forced to localise.

The American baked foods and coffee chain currently operates five stores in India and it plans to set up 100 over the next five years, encashing the country’s rapidly growing eatingout segment.

Retail consultancy Technopak Advisors estimates the country’s eating-out market to be close to . 33,000 crore, with organised restaurant chains clocking a growth of 20-25%. The organised segment is valued at about . 8,000 crore.
But, in the April-June quarter, Jubilant FoodWorks reported same-store sales growth of 22.3%, down from 36.7% in the year-ago quarter, as consumers cut back on discretionary spends in a subdued economic environment. Jubilant FoodWorks’ other brand in India, Domino’s, is the category-leader in the pizza segment.

Brands that are being shunted to less attractive locations to accommodate the coffee chain are not amused

A joke doing the rounds on Twitter these days is that the wait outside Mumbai’s first Starbucks coffee outlet at Horniman Circle is so long that a smart alec has started selling tea to those standing in the queue.

Starbucks Coffee Logo

This kind of consumer frenzy is music to the ear of mall owners in India’s big cities. Sensing a huge opportunity, many of them are offering the American coffee chain preferred locations within their malls, sometimes even at the cost of relocating a brand that is already present at the location.

It’s not as if the mall owners are expecting premium charges. They just want Starbucks as an anchor tenant as such iconic brands can bring home the much desired footfalls; and also inspire other quality labels to set up shop in their malls.

Starbucks had said that it plans to open 50 stores by the end of the year in Delhi and Mumbai. That plan may or may not materialise, but the coffee retailer surely is on the fast track to sign up new spaces. “For some international iconic brands, mall developers will be willing to bend backwards as they can improve the tenant mix,” says Jaideep Wahi, director, retail agency at Cushman & Wakefield India, a property advisory firm that helps companies such as Starbucks find store space.

The Ambience group has signed up Starbucks for two of its malls in Gurgaon and Vasant Kunj in the capital. At the Gurgaon mall, a brand that was on the ground floor is being relocated to another part of the mall to accommodate the coffee house.

“I am relocating a brand for Starbucks as we wanted to give them an indoor-outdoor combination,” says Deepti Goel, head of leasing at Ambience. Starbucks is negotiating for space at another mall in south Delhi. Arjun Sharma, the director of Select Citywalk mall in Saket says he would love to move brands around for the iconic brand. “It’s a relevant brand. It’s a great brand. We always seek marquee brands to improve our tenant mix,” he said.

Another developer in Mumbai, requesting anonymity, said he was even willing to compensate an existing store operator if he vacates his current location.
A Tata Starbucks spokesperson declined to comment on queries sent by ET.

The enthusiasm to put up Starbucks has caused heartburn among a few brands that have been asked to relocate. “We were asked to move to a less-attractive location within the mall, even though the mall owner agreed to give us favourable terms. But it still can’t make up for losing a premium location,” says a manager with an apparel brand, who did not wish to be identified for risk of antagonising the mall owner.

It might seem as if there’s a convenience store on every street corner in the Pikes Peak region. 7-Eleven dominates the market with dozens of stores, while Loaf ‘N Jug and Circle K are among chains with multiple stores.

Even so, more locations are on the way as convenience store chains see continued opportunities for expansion in high-growth areas of the region, and as time-strapped consumers continue to clamor for the quick, in-and-out service that convenience stores offer:

• Dallas-based 7-Eleven, which has roughly 50 area stores, says three to four more are planned this year and another five to six are coming in 2013. Among the new sites: A former Bennigan’s restaurant near Academy Boulevard and North Carefree Circle will be razed to make way for a store, while another location is targeted on Woodmen Road, west of Marksheffel Road.

• Loaf ‘N Jug, an arm of the Kroger grocery chain that owns Kings Soopers, has about 20 stores. Another store is planned southeast of Northgate Boulevard and Voyager Parkway on the Springs’ far north side.

• Circle K, based in suburban Phoenix and with about 20 locations in the area, plans a store on the city’s northeast side, at Tutt Boulevard and North Carefree.

• Midwest-based Kum & Go has aggressively entered Colorado Springs with plans to build 20 to 25 stores over five years. Its first location opened in May at Academy and Vickers Drive. Stores are under construction east of Interstate 25 and InterQuest Parkway, west of Powers Boulevard and Woodmen Road and at Powers and North Carefree, among other locations.

• San Antonio-based Valero, which operates corner stores under the Valero and Diamond Shamrock names, has about 30 area locations. A spokesman said the company plans no additional stores in the area, but occasionally looks to remodel and expand existing locations.

“They sell time,” Jeff Lenard, a National Association of Convenience Stores spokesman in suburban Washington, D.C., said of the popularity of the stores. “When they started back in the 1920s, they sold staple items like milk and bread and eggs after the groceries closed at 5. Over time, what they have sold has changed, but they (continue) to sell time. It’s get them in, get them out, get them on their way, and do it without a hassle.

“We are becoming more time-stressed and time is money,” he added. “And people will give you money if you give them time.”

There are about 150,000 convenience stores nationwide, Lenard said. With a U.S. population of roughly 311 million, that means there’s one store for nearly every 2,100 people.
Using that ratio, the Springs-area’s 2010 population of about 634,000 could accommodate nearly 300 convenience stores — meaning there’s room for growth.

States such as Colorado and cities such as Colorado Springs — with rising populations of young people and outdoor enthusiasts — are prime targets for convenience store chains, Lenard said.

“You’re talking about people that just want an energy bar or a bottle of water or whatever,” he said. “Whether they’re in their car or on their bike, stores are where people are.”

That’s why several new convenience stores are going up in fast-growing parts of the Pikes Peak region that have been relatively under served up to now, said Mark Useman, a retail specialist with Sierra Commercial Real Estate in Colorado Springs who has represented Kum & Go in its local land acquisitions.

“We’ve had decent growth in our city, and there are areas of the city that haven’t seen the expansion or growth of these convenience stores in the last four or five years because of the slowdown of our economy,” Useman said.

Kum & Go evaluated several markets before deciding to enter Colorado Springs, Useman said. The family-owned chain, based in West Des Moines, Iowa, likes secondary cities where it believes it can have an impact, he said.

7-Eleven has sought to expand in markets where it already has large numbers of successful locations, while also acquiring existing stores in markets that are near areas where 7-Eleven operates, said spokeswoman Margaret Chabris.

The chain, a wholly owned subsidiary of a Japanese retail conglomerate, has nearly 48,000 stores worldwide, according to its website; 7-Eleven opened more than 600 stores last year in the U.S. and Canada, and expects to open another 630 this year, Chabris said.

“We’re on one of the biggest accelerated growth strategies I’ve seen in quite some time,” she said. “You will see more 7-Eleven stores. What we have found is that when there are more 7-Eleven stores in a geographic area or our market area, people are more comfortable. They know what you have to offer. They can count on you being open. It increases sales for all the stores because people just know what to expect.”

At 7-Eleven, customers have come to expect familiar products, such as the popular frozen Slurpee drink that has its own website and Facebook page; 24/7 store hours; and promotional campaigns for products that are often tied into movies or television shows.

7-Eleven also prides itself on a sophisticated retail information system that lets store operators track inventory to determine what’s selling and what’s not — allowing them to stock particular items, and their quantity, to fit a particular store and its location, Chabris said.

“In the past decade or two, we have had a real laser-like focus on what the consumer and customer wants,” she said.

Kum & Go is hoping to grab some of those customers. Its Colorado Springs stores are 5,000 square feet each and built on 1.5-acre sites — buildings and parcels that are larger than its stores in other markets and its rivals in the Pikes Peak region. Stores have full kitchens, while fuel pumping areas have more room for motorists, Useman said.

“They cook fresh food,” he said of Kum & Go. “They are coming in with a different prototype and should take some of the pie away from the other stores.”

But even as convenience stores expand, they also face challenges.

Convenience stores fight a perception that their prices are much higher than their rivals. It’s true prices can be more, Lenard said, but convenience stores have high real estate costs to go along with big electricity bills that result from coolers and freezers for cold foods and drinks. Also, because their stores are smaller, they can’t buy products as cheaply as larger groceries, Lenard said.

Still, milk, soda fountain drinks and other items are competitively priced when compared with other retailers, he said. And price isn’t as much of an issue for some customers — even in a slumping economy — if they have a need they want to fill in a hurry.

“You don’t think about your stock portfolio when you’re thirsty, you get something to drink,” he said. “And when you’re hungry, you get something to eat, you don’t worry about the economy. So, it’s more impulse items. A few bucks here to solve a need or to reward yourself doesn’t seem so bad in the scheme of things.”

Meanwhile, convenience store chains aren’t just competing against each other; they’re also fighting larger groceries and, increasingly, Walgreens and other drug stores that sell milk, soda and food items, Lenard said. Even discount dollar stores in some parts of the south are selling cigarettes, he said.

Convenience stores also wrestle with changes in consumer buying habits when it comes to two longtime profit makers: gas and tobacco sales.

Soaring gas prices have driven motorists to seek the cheapest gas they can find, even if it means saving a penny or two. Not only do convenience stores compete with service stations, but with grocery chains whose loyalty programs reward consumers with additional savings on gas. Profits on gas sales are only 3 cents per gallon to begin with, Lenard said.

Meanwhile, tobacco sales are down because fewer people are smoking.

“Your two big traffic drivers are facing a tough road,” Lenard said.

That’s why Springs-area consumers are likely to see more and higher quality food prepared the way they want it, and expanded drink items; food accounts for 23 percent of convenience store sales, while beverages are another 30 percent, Lenard said.

Despite those challenges, the overall state of the convenience store industry has been healthy; three of the last four years have been the most profitable on record for the industry as a whole, Lenard said.

“There are huge challenges when it comes to the future of fuel, the future of tobacco and all of the issues related to credit card fees. And not to forget competition,” he said. “But if you can deliver what the customer wants and solve their needs, and do it fast, you can do very well.”
—
Contact Rich Laden: 636-0228 Twitter @richladen
Read more: http://www.gazette.com/articles/stores-144657-adding-convenience.html#ixzz26oDmrthG

The China Chain Store and Franchise Association (CCFA) on Sunday urged the government to pass plans to cut bank card-swipe fees charged to merchants as soon as possible in order to shore up consumption.

Secretary-General of the CCFA Pei Liang told Xinhua that a proposal for cutting card-swipe charges issued by authorities is currently seeking opinion from commercial banks.

“China’s retail sales growth has slowed from a year earlier, so the government should step up the implementation of the plan with a view of promoting consumption,” Pei said.

Data from the statistics bureau shows the country’s retail sales of consumer goods expanded by 13.2 percent year on year in August, down from a rate of 17 percent last August.

At present, fees charged to supermarkets and stores for transactions made with bank cards range from 0.5 percent to 1 percent of the transaction value.

Transactions made with bank cards are growing at an annual rate of 30 percent, and bank card transactions currently make up 35 percent of all supermarket transactions and more than 60 percent of all sales in stores, according to a survey conducted by the CCFA.

However, Chinese merchants are seeing their operational costs growing at an annual rate of more than 15 percent and their average profit margin is around 2 percent, according to the survey.

Twenty-four percent of Indian adults with Internet access have bought an ebook. Now that group could get a lot bigger: Amazon has launched a standalone Kindle Store in India and is selling Kindle exclusively through Indian electronics chain Croma.

photo: Amazon

Amazon does not yet operate a general e-commerce site in India, but it is now selling ebooks there. On Wednesday the company launched the India Kindle Store (www.amazon.com/kindlestoreindia), which sells over a million titles priced in Indian Rupees.

In June, I wrote about the ebook transition in India. In a presentation at Publishers Launch BEA, Bowker’s Kelly Gallagher said that 24 percent of Indian adults with Internet access have bought an ebook. It’s key to look at the size of the overall population combined with the Internet penetration rate: “Suddenly, India becomes the second largest potential market” after the United States. The transition is primarily led by professional, business and academic ebooks, he said — 80 percent of Indian ebook buyers have bought an ebook in one of those genres.

A family grocery chain that came to Mississauga as an outdoor market some 45 years ago has grown to 25 stores across the province.

Business is booming. Anthony Longo tours his new store in Leaside. The family grocery chain is a Mississauga favourite. Toronto Star photo

The family-owned Longo’s chain is in expansion mode, having more than doubled its number of stores in the GTA since 2000. The new 48,000-sq.-ft. Leaside store opens today, bringing the number of Longo’s stores in Ontario to 25.

CEO Anthony Longo’s father opened the first store on Yonge. St. in Toronto in 1956. The family lived upstairs.

The Longos moved their base of operations to an open-air market at the four corners in Malton in 1967.

Longo’s opened its first real supermarket at Goreway Dr. and Derry Rd. in 1980. It closed in September 2008 but the chain still has three stores in Mississauga, where it was based for many years.

In all, 14 family members work full-time in the business.

“As a family, we set out to decide, how far do we want to grow? We decided we’ll stop when we can’t execute great stores anymore. I don’t know when that is,” said Longo.

Longo said the competition in the grocery market is “very fierce.” Despite that, there is room for growth, he said. In the GTA, groceries is a $13-billion a year business.

Cut Time To Market Amid Downtrading Fears During Slowdown

Mumbai: Fast-moving consumer goods (FMCG) companies are using speed as a competitive weapon to win in the market place, especially when talks of a slowdown bring the possibility of downtrading into sharp focus.

Growth in the FMCG Industry has not lost steam even as other sectors have slowed down, but there is concern about a possible impact considering a deficient monsoon this year. The industry believes there is one weapon which can help companies win, and that is speed.

A Boston Consulting Group (BCG) report, ‘Speed To Win’, says increased agility can solidify a competitive position, boost profitability and reduce risk. It says for standard new product development, a seven months time to market can separate the best in class from average players. But would it also work in a slowdown? “In slowdown situation it is even more important as the consumers typically start to change their consumption patterns and it is important to refine the offerings (in terms of price pack architecture, composition and packaging) to ensure alignment with the consumer requirements,” said Abheek Singhi, partner & director, BCG.

A company can outpace its rivals by increasing its market share, boosting its negotiating leverage towards trade and positioning itself as an innovator and the mantra is: standardize, prioritize and mechanize. Take the case of Nivea lipcare. Speed helped the company redefine this category with the trade in terms of merchandising and distribution. The category was treated like an “impulse confectionery” and not like a traditional skincare category. “Our actions have followed out thoughts and results are there to be seen. We have been quicker than most of competition in developing the premium lipcare category for Nivea. All our initiatives have hit before competition, be it variety/price points/distribution. This has given us leadership,” said Rakshit Hargave, MD, Nivea India.

With compressed product life cycles, especially in some of the newer categories, being quicker to the market is a great advantage. “Speed to market is important, not just with new product development but also with reaching out to the consumer and ensuring that even the remotest of corners of the country get the products in a short period of time,” said Sunil Duggal, CEO, Dabur India.

Dabur integrated its consumer care and consumer health businesses and this was the genesis of ‘Project Speed’, which was designed to help the firm cope up with challenges by leveraging the power of its combined product portfolio through a unified sales & distribution structure. Dabur has also put in place an initiative to double its rural reach. The company is hopeful that this would enable it to have a direct access to 3,000-population villages across 10 states that account for 72% ofthe rural FMCG potential.

Some other examples are brands from mid-sized companies like Paras and Emami which were successful in gaining share as their product development times were shorter than others in the sector. When Emami conceived the idea of a men’s fairness cream, it knew it had a winning concept. What was important, however, was to ensure that it was put into market at a speed before others. “We were able to go to market within just under a year from the time the idea was conceived. This requires great agility. It took our established competitors by surprise as elements of marketing were in place within the short time,” said N Krishna Mohan, CEO, sales, supply chain and human capital, Emami. As a result, Emami enjoys market leadership in the category.

“Empowered companies with flatter and decentralized decision making structures can outpace its rivals in speed to market. This, when accompanied by stronger local consumer insights can develop into a potent competitive advantage,” said Saugata Gupta, CEO, consumer products division, Marico.